1. Fiduciary Responsibilities Regarding Your Retirement PlanBy
R.L. “Dick” Billings, CPC, CEBS, ERPA *
* enrolled to practice before the IRS as a retirement plan agent
Texas NAHRO - April 11, 2018

2. Disclaimer
The views in this presentation are the opinions of Billings and Company for education purposes only. No other party or governmental agencies has reviewed or approved the content of this presentation.
Texas NAHRO - April 11, 2018

3. Questions/Discussion
Today’s Topics
Fiduciary Liability
Industry Trends
Recommendations
Questions/Discussion
Texas NAHRO - April 11, 2018

4. Who is a Fiduciary and what are one’s duties? ERISA vs. non-ERISA
Fiduciary Liability
Who is a Fiduciary and what are one’s duties?
ERISA vs. non-ERISA
Due Diligence
Best Practices
Texas NAHRO - April 11, 2018

5. Who is a Fiduciary? A plan’s fiduciaries will ordinarily include:
A fiduciary is anyone “exercising discretion or control over the plan.”
A plan’s fiduciaries will ordinarily include:
the Trustee (directed or discretionary?)
investment advisers (maybe or maybe not)
all individuals exercising discretion in the administration of the plan (including but not limited to):
elected officials
employees
Board Members/Commissioners
all members of a Plan’s Administrative Committee (if one exists)
Texas NAHRO - April 11, 2018

6. Fiduciary Duties – under ERISA
Fiduciary Duties - ERISA Section 404(a)(1)(B)
A. Prudent Person (or Expert?) Rule
1) A fiduciary shall discharge his duties with respect to a plan sole in the interest of the participants and beneficiaries; and
2) With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters* would use in the conduct of an enterprise of a like character and like aims.
* emphasis added
Texas NAHRO - April 11, 2018

7. Fiduciary Duties – Non-ERISA, but a common State Statute
The duty of care involves discharging one’s duties with the care an ordinary prudent* person in a like position would exercise under similar circumstances.
* emphasis added
Texas NAHRO - April 11, 2018

8. ERISA versus Non-ERISA
Generally speaking:
Private sector retirement plans are subject to the Employee Retirement Income Security Act of 1974 (ERISA)
501(c)(3) Corporations would be considered Private Sector
Governmental retirement plans are, for the most part, not subject to ERISA
If not subject to ERISA, subject to state fiduciary statutes
Either way, as the Plan Sponsor, YOU are responsible!
Texas NAHRO - April 11, 2018

9. Due Diligence 2. standard of proper disclosure
1. appropriate review and procedure
the degree of care that a prudent person would exercise
2. standard of proper disclosure
the disclosure to potential buyers (participants?) of all relevant information that applies to a security issue
Texas NAHRO - April 11, 2018

10. Typical Duties under State Fiduciary Law
Duty of Competence
Duty to exercise reasonable discretion
Duty of Loyalty
Duty of Full Disclosure 10
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11. Practical things to worry about!
Plan Document
Recordkeeper/Custodian
Plan Investment Offering
Investment Expertise
Employee Education
Plan Competitiveness 11
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12. Plan Document Compliance
Is your plan document current with all required amendments and updates?
Is your plan being administered in accordance with your plan documents?
Eligibility and contributions
Loan and hardship requests
In-service withdrawals, etc.
WHERE is your document?
Texas NAHRO - April 11, 2018

13. Recordkeeper/Custodian
Who is holding (has custody) your retirement plan assets?
Is custodian audited? (SSAE 16)
Formerly SAS 70
Do you receive independent reporting? 13
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14. Plan Investment Offering
Mutual Fund or Variable Annuity?
Multi-manager platform?
Asset class representation?
Fixed/Stable Value Option? 14
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15. How is your Plan being served?
Employee Education
Web-based?
Onsite?
Investment Expertise
Plan level – who is monitoring the performance of the plan investment option?
NOT just the return!
Participant level – do plan participants have access to personalized investment advice? If so, online or in person? 15
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16. Overall Plan Competitiveness
Price – only relevant in the “absence of value”!
Services – what you want – what you do NOT want
Performance – again, not just the return! 16
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17. Industry Trends Hiring of 3(21) or 3(38) Fiduciary
Establishing an Investment Policy Statement (IPS)
Quarterly Investment Monitoring
Providing Participants
Enhanced Employee Education
Lifestyle/Target Date Investments
Independent Investment Advice
Managed Accounts
Texas NAHRO - April 11, 2018

18. Recommendations Establish a formal “Plan Committee”
Even if Committee of one person
Insert Committee “Minutes” to Board Minutes on a regular (semi-annual?) basis
Exclude any Plan details from Personnel Manual
Mention the plan’s existence, but refer reader to “Summary Plan Description” for details
Remit employEE contributions EVERY payroll, whether pre-tax, or post-tax contributions
Document the process…
Texas NAHRO - April 11, 2018

19. Recommendations - continued
Implement a “Due Diligence” Program
Check with your current provider
Investment Policy Statement (IPS)
Criteria used to add/delete funds
Review Plan for Competitiveness
Compare services, fees, performance, etc.
Electronic deposit and payouts
Increase Employee Awareness
Plan Provisions
Wholistic Investment Education
Document the process…
Texas NAHRO - April 11, 2018

20. Billings and Company, Inc.
Our Contact Information
Billings and Company, Inc.
R.L. “Dick” Billings – Extension 3002
Trey Becker – Extension 3023
Keri Zachmann – Extension 3020
Texas NAHRO - April 11, 2018

21. Discussion
Q & A
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